05.09.2006

Lavendon exceeds preliminary numbers

The Lavendon Group has released its detailed half year trading statement this morning. The detailed results are significantly better than the preliminary numbers the company issued in early July, particularly in the UK. (See Lavendon revenues rise 17%)

Group revenues increased by 19 percent to £57.1 million, while operating profits more than tripled to £3.3 million. Providing pre-tax profits of £1.13 million compared to a pre tax loss of (£1.3 million) for the same period in 2005.

UK

The group says that in the first half of the 2006 the market conditions in the UK continued their favourable trend, whilst “remaining very competitive”, limiting the scope to increase rental rates, particularly in the construction sector.

Lavendon’s strategy to deal with this includes concentrating Nationwide on the market areas where it has been successful while acquiring regional operators, Panther, AMP and Kestrel to expand the groups sales in the areas that Nationwide has found challenging in the past few years.

A major benefit of the acquisition has been increased ‘cross hire’ between the new acquisitions and Nationwide, thus helping to lift utilisation levels.

UK revenues rose by 27 percent in the first half to £37.2 million two percent of which came from Nationwide and the balance from new acquisitions. UK operating profits increased by 46 percent to £4.7 million 10 percent of which came from Nationwide, while the balance - £1.2 million came from the acquisitions.

Germany

Lavendon says that as activity levels in Germany are beginning to recover but it has been disappointed that rental rates have remained at poor levels.

After some major restructuring since 2004 Zooom Germany’s month on month revenues are growing again although sales for the first half fell by three percent compared to 2005 to £9.8 million.

The operating loss, improved 16 percent over 2005 to (£2.1 million) The company believes that this will continue to improve in the second half.

France

Revenues in France increased by 10 percent to £3.4 million whith operating losses reducing to (£0.5 million) an improvement of 20 percent on 2005.

Spain

In Spain, the company’s change in tactics to two strong locations has resulted in a revenue growth of 11 percent to £2 million, producing an operating profit of £100,000, compared to a loss of the same amount in 2005.


Middle East

Increasing demand in the Middle East has led the company to add 100 additional units to its regional fleet. Revenues jumped by 27 percent to £4.7 million as a result but operating profits increasing by less than 10 percent to £1.2 million.

The company says that the reason for the variance between revenue growth and the profits is down to one off events, such as transport, clearance and handling charges associated with the fleet additions, that it has expensed directly to the profit and loss statement.

Further increases in the Middle East fleet are planned for the second half

John Gordon, Lavendon group chairman said: “The financial performance of the Group continues its improving trend, established in 2005, with revenues increasing and operating margins growing. The pace and scale of the improvement is being enhanced by the success of the businesses that were acquired during the first half of the year, and which have produced immediate financial benefits for the Group”.

“The Group is now several months into the first phase of strategic growth, based on market consolidation in our main markets and selective organic growth in those markets where the addition of capacity is unlikely to contribute to a deterioration of market conditions”.